He and his wife look on it as a business and will take on projects only if the figures add up."[Ahead of an auction], I first ask the agent for the 'out price' - the amount the house would be worth once it's done up," John explains. "Then I work out how much it would cost me to do it, and that fixes my limit. There's nothing dreamy about it at all."HOW TO FIND A HOME UNDER THE HAMMERAuction houses often advertise in the local press. The following are mainly London-based but sell properties around the UK:Edwin Evans Auctioneers, 020 7228 5864;Harman Healy, 020 7299 7300;Allsop & Co, 020 7437 6977;Barnard Marcus Auctions, 020 8741 9990;UK Auction List, .The Essential Information Group also has details of auctions. I think it's worth £50,000 now," John adds.The couple do all the work on their properties themselves. They have recently made extra money by doing up homes for friends and relatives.Buying and renovating is no soft option, John stresses. "After spending £5,000 on materials, we [did it up and now] rent it out for about £300 a month.
Even so, it may still be worth doing this, if you've spotted a real bargain you would otherwise lose.'Homes Under the Hammer' can be seen on weekday mornings at 10am on BBC1.THEY LIVE THE DREAM, BUT THE REALITY IS A SERIOUS BUSINESSJohn and Diane Edwards own two properties in the Welsh valleys, both bought at auction.The houses are rented out privately to supplement the Edwards' income from their boat-trips business, and will eventually form part of their pension income."We bought one house in Tonypandy a couple of years ago for £24,500," says John. Today, the property is worth about £70,000."Last year, the couple purchased another property - this time in Tylorstown - for £32,000."We had to spend £8,000 on that one, and again we've rented it out for £300 a month. This often means a short-term bridging loan that comes with high interest payments, as well as another arrangement fee.If you leave your financial planning until after the auction, you may well end up paying a higher rate of interest in order to get a home loan rushed through. (Cash transactions are not allowed because of the risk that a purchase could be used by those engaged in money laundering.)You'll need ID such as a passport or driver's licence, together with a recent utility bill A £175 auctioneer's fee will also be payable. The balance of the purchase price must then be paid 14 to 28 days later."The turnaround between making a successful bid and having to complete [the deal] is usually just 20 working days," warns Paul Stockwell of mortgage broker Savills Private Finance."Most mortgage lenders take longer than this to process a loan, so you need to find out beforehand [from a lender or broker] whether you can meet the deadline, and also confirm that you can actually borrow that much money."If you've fallen in love with a property and bid recklessly, there may well be a gap between what your lender is prepared to advance and the price you've paid - "a gap you'll have to fill in some other way," warns Mr Stockwell.
It's easy to get carried away and over-bid, so set yourself an upper limit and stick to it.Most critically, don't buy something you haven't seen just because you weren't able to buy a property you really wanted.The bidding process may seem daunting, but the toughest part of buying at auction is finding the finance. Successful bidders must immediately provide a deposit of 10 per cent of the sale price in the form of a cheque or banker's draft. Check the seller's legal documents - get a solicitor to look at the deeds and any planning restrictions - and arrange a survey and valuation. This latter stage is crucial to give you a clear idea of exactly what you are bidding for.A survey may seem a waste of money if you then fail to secure the property on auction day. But if you buy something that you later find needs extensive repairs, you could end up spending thousands more than you'd budgeted for.On the day of the auction, try not to let excitement take over. Ideally, attend a couple of auctions as a spectator to see how they work.While house-hunting in your chosen area, you may see a board outside a property advertising it for sale at auction. In addition, auction catalogues, usually published around three weeks before a sale, are available from estate agents.When you find something you like, run a critical eye over it, just as you would when buying any home.
